Loan Waiver and Loan Write Off : Two different concepts, but portrayed as 'One' by Media. : Adv. Rohit Erande.

Loan Waiver and Loan Write Off : Two different concepts, but portrayed as 'One' by Media.

Adv. Rohit Erande.

Hon. Supreme Court while coming heavily on fake news relating to Corona, observed "In Particular, we expect the Media (print, electronic & social)  to maintain a strong sense of responsibility and ensure that unverified news capable of causing panic is not disseminated....."

But just after 30 days from the above order, the media in its 'Sabse Tej' manner published the news in such a fashion that as "RBI has waived off loans worth Rs.68,000/- Crores !!". 

As expected it has stirred up the hornet's nest. Political accusations from both the sides are on. Something different than Corona News ? 
The number no doubt is such big that perhaps only a super computer can calculate. 

But was it Waiver or Write Off ? and the answer is "write-off". Let's see the difference in nutshell.

 1. Loan Write Off : 

Writing Off any loan or asset is the old practice followed by Banks under the guidelines of RBI. When any loan recovery is not possible, then Bank decides to write it off from the balance sheet, to save the tax implications, nevertheless its recovery is possible and legal. 
To Write Off loan comes within the domain of Banks, whereas to grant waiver is the right of Government. 
 If you search, Google will show you loans worth Rs.3,16,500 Crores of PSU Banks  were written off in the period 2009-2014 and out of which only Rs.44,900 Crores loans were recovered. 
The problem of recovery of loans especially  given to bigwigs has been an decades old problem and on the contrary ask any common man what happens how difficult to get a loan and how many securities they take from you and suppose if a single installment is missed, how you are trolled..

2. Loan Waiver : 

Loan waiver is totally different than writing off the Loan. On lighter notes, Loan waiver  is such an option, which any borrower will happily accept. One may say that Loan waiver includes loan write off, but not vice-versa. In Loan Waiver, Banks will give up their claim of recovery of loan and the account is finally settled and there remain no dues to be paid by the Borrower.  

The most common example of Loan Waiver is Farmers Loan, which is waived by almost all the Governments periodically as farmers fail to repay the loan on account of heavy rains or no rains. Though, farmers' loan waiver has been widely criticized by many. 

I must clear here that this is not a political post, for or against any party. Just an attempt to clear what the factual position of terminology is. 

Thanks and regards,

Adv. Rohit Erande.

Pune.